Non-Doms – Do Politicians Know What They’re Talking About?

April 9, 2015

Okay silly question!

Perhaps what we should be asking is… do politicians really care about what they’re talking about, or is it all about headline grabbing?

What’s Happened?

In the last few days, electioneering has ramped up the tax card. Yesterday, Ed Miliband announced that a Labour government would abolish the Non-Domicile tax status in a bid to raise hundreds of millions of pounds in extra tax revenue. Miliband believes the Non-Dom status is a symbol of tax avoidance and “makes Britain an offshore tax haven”.

What is a Non-Dom?

The long established tax principle has been that Non-Doms are exempt from having to pay income tax or capital gains tax on any income or gains from abroad (so not on UK sources), unless they decide to bring it into the UK. Hence, this gave Non-Doms a clear advantage over UK domiciled taxpayers.

From 6 April 2008, a new regime was introduced to try to redress the balance, bringing in the ‘Remittance Basis Charge’, meaning payments of £30k pa needed to be made to continue to have the beneficial treatment. In what was a hugely complex piece of legislation, it proved to be only the start.

How Much Do Non-Dom’s Pay For This Status?

Subsequent tinkering in Finance Acts meant the cost of remaining a Non-Dom has now risen to £90k for those who have been in the UK the longest, and potentially £270k in future years. And whilst the focus has been on the taxpayers, their advisors have also had to adapt, introducing new record keeping procedures and educating their clients in these complexities.

So seven years later… how much does Miliband care about making such a sweeping statement? Take a step back – who are we talking about?

Even according to the Treasury, only around 5,000 individuals pay the RBC each year. Of those, 3,000 have paid the RBC in every year for which it has applied. So should such headlines be directed at a number less than the crowd attendance at Alfeton Town’s last football conference league match?

And it’s not just Miliband.

Now What?

This year’s Finance Bill was published on the 23rd March. It went through its 10 stages of Parliament in a little over 2 days. 340 pages of technical financial legislation, including amendments to Non-Doms’ treatment, passed with little or no democratic scrutiny. So, do politicians really understand what they are saying and do they care?’